Getting a Mortgage After a Repossession

Repossessions are generally considered one of the more severe types of bad credit, and many people who have one listed on their credit file wrongly believe that they might never get another mortgage again.

There are many factors to consider, but yes, it is possible to get a mortgage after repossession. In this guide, we’ll tell you how to do it, how long you’ll need to wait, and where to get the right advice.

Can you get a mortgage after a repossession?

Yes, it’s possible! The older the incident, the more likely it will be that you could secure a mortgage. Lenders will also focus on the amount of debt involved and the circumstances surrounding the repossession.

So, if the repossession took place within the last 12 months, we are not aware of any lenders prepared to even consider your mortgage application. If your property was repossessed within the last 3-4 years, it will still be quite difficult, but not impossible.

From 5-6 years onwards, there’s a greater chance that more lenders will consider you for a mortgage. As with all bad credit situations, time is the great healer.

What happens when your house is repossessed?

When a property is repossessed, it is sold to cover the cost of your mortgage plus all legal costs incurred by the lender in gaining a repossession order. This is bad news if you are in negative equity, as the sale price probably won’t cover the outstanding mortgage.

If this is the case, you may still have to pay the outstanding amount back to the lender. This is called a legacy payment and could reduce the number of lenders available.

If the circumstances were beyond your control, such as illness, redundancy, etc., then they will be a little more sympathetic to your application.

The key to getting a mortgage with a repossession on your credit file is to find an experienced broker who specialises in finding mortgages for people with repossessions on their credit history.

Do you have to declare your repossession?

Yes, you do. Even if the incident has been removed from your credit report, you must declare it if the mortgage provider asks.

Lenders view repossession as an extremely severe adverse credit event, just like bankruptcy. If you fail to declare it when asked and the incident comes to light later, the lender will more than probably decline your application.

How to get a mortgage after a repossession

Some preliminary work will help your application go through smoothly.

Here are a couple of things you need to do to give your mortgage application the best chance of success.

We offer a free, broker-matching service that will quickly assess your needs and circumstances and then pair you with a mortgage advisor who specialises in post-repossession mortgages and is ideally placed to help you – Make an enquiry to get started.

How much deposit will you need?

If you have bad marks on your credit report, repossession being the worst (along with bankruptcy), most mortgage providers will want a much higher deposit to offset the perceived financial risk you pose to them.

The larger the deposit you can put down, the more likely the lender is to consider your application.

The chart below will give you an indication of what a mortgage provider may require by way of deposit, taking into consideration the age of the repossession.

The information in this table is indicative only, and your chances of securing a mortgage will depend on the lender’s criteria and your unique financial circumstances when you apply. Always consult an expert broker before considering an application.

What can you do to improve your chances of getting a mortgage?

You can boost your chances of qualifying for a post-repossession mortgage by doing the following…

Keep a regular check on your credit record

If your credit history is clean after a repossession, mortgage lenders may consider your application more favourably.

You can use credit reference agencies like Experian, Equifax and Callcredit to check your credit history. Do this before your prospective lender does their own credit search. Their services are free and well worth the time.

If you have other black marks on your credit history, it might be worth delaying your mortgage application for a few months while you rebuild your credit rating.

Don’t take on any new financial commitments

You shouldn’t take out any new loans or financial commitments in the weeks or months before applying for a mortgage.

Keep your current financial commitments up to date

Ensure all your utility bills, rent/mortgage, credit and loan repayments are up to date and paid promptly. Lenders want to be convinced that you’re financially responsible, which will go a long way toward helping create a good credit rating.

Lenders who offer mortgages after a repossession

As you can imagine, very few high-street lenders are prepared to accept a mortgage application from someone with a repossession on their credit file, as they consider the financial risk too high.

Repossession and bankruptcy is considered a severe adverse credit incident, so expect to be subject to higher deposits and interest rates.

This table gives an indication of mortgage providers’ attitudes toward applications from people with repossessions on their credit reports.

The information in this table is indicative only, and your chances of securing a mortgage will depend on the lender’s criteria and your unique financial circumstances when you apply. Always consult an expert broker before considering an application.

Should you go directly to one of these lenders?

No, it’s not something we recommend.

The reason is that the advisor you’ll deal with works directly for the bank, not for you.

If they perform a ‘hard’ credit check (as they usually will), it will leave a mark on your credit rating. If your application is rejected, that mark will be a red flag to other mortgage providers.

Get matched with a broker who specialises in post-repossession mortgages

As you can see, there are some obstacles to overcome when applying for a mortgage with a repossession on your credit history, but it’s not impossible.

If you meet the mortgage provider’s criteria outlined above, you can apply for a mortgage, even with a severe adverse credit rating.

But it is essential that you talk to a mortgage broker who specialises in finding bad-credit mortgages, especially someone who has had a repossession.

They will provide the right advice and help you find a mortgage deal that suits your financial circumstances.

Call 0330 822 0505 or make an enquiry, and we’ll match you with a broker who specialises in post-repossession mortgages today.